Tax on property sale ,info required for senior citizen
Querist :
Anonymous
(Querist) 18 June 2010
This query is : Resolved
Senior citizen women (above 70 years old.she is house wife. No other income source)is having a land.
She wish to sale the land as she own self or her relatives are not able to look after the land due to various problems around.
What tax benefits she may get?
if she will get all the money in white?
The land is in her possetion from last 20 years & came to her due to will of her mother. Her mother purchased that land for her 45 years back.
Querist :
Anonymous
(Querist) 18 June 2010
Land Property and the senior citizen women owner is in Maharashtra state.
Vineet
(Expert) 18 June 2010
1. Being a senior citizen, her income upto Rs 2.40 Lakhs is exempt from income tax. As she does not have any other source of income, the balance long term capital gain arising out of sale of land is taxable @20.60%.
2. The special tax treatment ends there and no other special benefit being a senior citizen lady is available.
3. The cost of land shall be taken as on 1-4-1981 market price and indexation benefit shall be available.
4. If there is no immediate requirement of funds, I would suggest to sell the property after 1-4-2011 ie after new Direct Tax Law being implemented. Under new law, as proposed the cost will be adopted as on 1-4-2000 (that means you get benefit of appreciation till that date without any tax) and in current case tax rate would be only 10%. Of course the assumption is that the lady doesn't want to block the sale consideration in another investment to save tax.
VENKATRAMAN SHRINIVAS
(Expert) 19 June 2010
The querist has not stated whether the land is agricultural or vacant land. If it is agricultural if it is outside the Corporation/Municipal limits or witrhin the urban aglomeration notified by the government. If it falls sout side and is an agriculturala land, it would not be regarded as a capital asset witrhin the meaning of section 2(14) of the Income-tax Act,1961 which defines a cpital asset. Only when the capaital asset is transferred does the scope of capital gain arises for consideration.
Assuming that it is not agricultural land, as sggested by the learned Mr.Vineet it would suffer tax on the net consideration as reduced by the cost and expenses incidental to the transfer, such as legal fees, brokerage paid for the deal etc., It is true that it would be emore advantagenous to sell the property with the advent of the new Direct Taxes Code, where the benefit of higher indexation of the cost as also lesser incidence of tax could be achieved. he code does not seem to provide any mode of investment by which the gains could be exempt from tax. But all said and done, since the sale is primarily to maintain on her own by the elderly person, she maya not desire locking up her funds, especially when she is insecure, left to fend for herself.
Querist :
Anonymous
(Querist) 19 June 2010
It is vacant land in municipal area.
soumitra basu
(Expert) 20 June 2010
1. Get the market value of the property as on 1st April, 1981.
2. Make the indexation as per cost of index.
3. Compute the capital gain.
4. Only the capital gain has to be invested not the entire sale proceeds.
5. If the lady can not invest, pay the tax @ 20% by reducing Rs. 2,40,000
